No News From Jackson Hole
- Gold surged 3.3 percent last week. Prices this week have been basically flat.
- The S&P 500 Index has declined modestly from its highs of a week ago (can anyone tell me why the markets are trading at these levels – are things that rosy?)
- The Euro vs. Dollar has found footing at $1.25 (the Dollar rolled over and fell 1.2 percent last week).
- Global economic data appears very weak. The Confidence Index fell 4.8 points in August to 60.6 – the largest retreat in 10 months.
- Conversely, home sales in major cities showed the first annual gain in two years.
- Japan has recently cut its country’s growth forecast (again).
- Bernanke’s impending Jackson Hole boondoggle speech on August 31st has gold adopting a cautious tone in the short term (more below).
The World Gold Council (see our dealer listing here) expects the second half demand to demonstrate improvement. Gold demand was off in the first half, largely due to the effect of Indian tax hikes, a soft Rupee and overall stagnant prices.
With renewed investor interests on stabilized and increasing gold and silver prices, combined with continued central bank purchases (25 percent increase over last year), demand will stabilize and increase.
Bernanke will probably come out with news that is no news – something like “the Fed is committed to keeping rates low through 2014, but stands ready to make liquidity available should market forces warrant…” Meanwhile, ‘Operation Twist’ continues unabated and completely off the radar of the financial and investor community.
All Things Considered – John’s Commentary:
The Fed will eventually have to do something. The same for the ECB. It’s just a matter of time, not a matter of ‘if’. It’s been the same story for the last 10 years.
Similar to life insurance and long term care, the premium (read: the price of gold and silver) goes up every year you wait to initially buy (or add). The metals will never be cheaper than they are today.
Action to take: Buy insurance. If you don’t use it, you will get your money back and then some.
Quote of the day: “Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state.” – William F. Rickenbacker
